ETF Spotlight: U.S. Growth Stocks
January 10th, 2012 at 7:00am by Tom Lydon
After breaking out of their range in October, U.S. stocks are now trying to make the next move to the upside after consolidating.
In the fourth quarter, the market was led by the consumer discretionary and information technology sectors. Standard & Poor’s believes a growth ETF may be the right investment to gain exposure to these two areas in 2012.
Todd Rosenbluth, S&P Capital IQ ETF analyst, said the Vanguard Growth ETF (NYSEArca: VUG) shows “favorable overweight inputs for its performance analytics and its cost factors,” in a recent note. “The ETF holds a number of growth stocks we view favorably.” [ETF Chart of the Day: Retail]
The fund tries to reflect the performance of the MSCI U.S. Prime Market Growth Index, which includes large- and mid-cap companies. The consumer discretionary sector accounts for 17.20% of the fund and information technology is 30.70%. VUG has an expense ratio of 0.12%. [Relative Strength: Technology ETFs Lead Market Higher]
The fund has a 12-month yield of 1.19%, according to Morningstar.
S&P Capital IQ notes the fund’s attractive top holdings on a valuation standpoint, including Apple (NasdaqGS: AAPL), International Business Machines (NYSE: IBM) and Wal-Mart (NYSE: WMT).
Based on earnings and dividend growth and consistency, the fund also holds high quality companies with low levels of risk, such as Coca Cola (NYSE: KO), IBM and Oracle (NasdaqGS: ORCL).
Vanguard Growth ETF
For more information on market sectors, visit our sector ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.